SYDNEY, Oct 22 (Reuters) – Australian Treasurer Jim Chalmers will warn of softer economic growth and higher unemployment as interest rates remain high and inflation proves stubborn, according to excerpts of a speech that was reviewed by Reuters on Thursday.
Chalmers is due to deliver an address at the Citi A50 Economic Forum in Sydney on Friday.
Here are some details:
• The Treasury was in the process of revising its economic forecasts for its mid-year budget update due in December, Chalmers said
• “Higher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity and we can see that in the softening of the labour market,” Chalmers said
• “Higher interest rates and higher inflation are likely to mean softer growth and slightly higher unemployment,” he said
• However, he added that one positive so far in the economy has been the resilience in business investment, which could more than double compared with expectations in May and rise more than 5% this year
• The Reserve Bank of Australia has raised interest rates four times this year to 4.6%, but underlying inflation has remained stuck at 3.6% for months, with higher global oil prices threatening to further fuel price pressures
• The unemployment rate hit a five-year high of 4.7% in September, a year ahead of the RBA’s own expectations. Markets imply a 64% chance that the RBA could raise rates a fifth time next month to 4.85%
(Reporting by Stella Qiu; Editing by Thomas Derpinghaus)
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